Edit: This question attracted way more interest than I hoped for! I will need some time to go through the comments in the next days, thanks for your efforts everyone. One thing I could grasp from the answers already - it seems to be complicated. There is no one fits all answer.
Under capitalism, it seems companies always need to grow bigger. Why can’t they just say, okay, we have 100 employees and produce a nice product for a specific market and that’s fine?
Or is this only a US megacorp thing where they need to grow to satisfy their shareholders?
Let’s ignore that most of the times the small companies get bought by the large ones.
There are plenty of small companies that don’t grow. Think mom and pop shops and self employed tradesmen.
I’ve you get a bit bigger and you’ve already got the hassle of employing lots of people in multiple places you can’t really balance it to be neutral, you will grow or shrink and it’s a lot more pleasant to grow than shrink.